EDP board discusses routing expiring incentives into Catalyst Fund; asks for options and annual review

The Economic Development Partnership (EDP) board discussed a proposal to redirect expiring economic development incentives into Denton City's Catalyst Fund during its April meeting, with staff asking the board to recommend whether expiring sales‑tax and ad valorem incentive revenue should be reallocated to the fund instead of returning to the general fund.

EDP staff said the proposal was developed from a two‑minute pitch by Council Member Jill Jester and asks the city to consider redirecting portions of expiring Chapter 380 and sales‑tax incentive agreements into the Catalyst Fund to build a cash reserve for future economic development grants and competitive cash incentives.

Jamie Adams, presenting the EDP analysis, said the forecasted potential from existing incentive agreements was roughly $8.9 million over a 10‑year horizon: about $6.9 million tied to Chapter 380 and sales/mixed beverage incentives and about $1.9 million from tax abatements. "If we're able to meet $9,000,000 over the course of two years, that would be ideal," Adams said, adding that the estimate depends on the general fund's status and on whether companies seek new or expanded incentives.

Why it matters: board members said a dedicated cash balance would make Denton more competitive for headquarters and other relocations that sometimes require upfront cash grants rather than only rebates, but several members warned that a dedicated revenue stream should be tied to a clear strategy and annual fiscal review.

Board discussion and board guidance: Members offered a range of views rather than endorsing a single fixed formula. Some favored routing a substantial portion of expiring incentive revenue into the Catalyst Fund while others urged a moderate approach and stressed that any reallocation should be reviewed as part of the council's annual budget process.

Council Member Jill Jester, who proposed the two‑minute pitch that launched staff work, framed the change as a way to preserve cash for future economic development incentives. Several board members said they wanted staff to return to council with specific options (for example, 25%, 50% or up to 100% of expiring incentive revenue) and with a policy tying a target balance to the city's strategic priorities so councilors could weigh the tradeoffs against other needs such as public safety or infrastructure.

Staff direction and next steps: The board did not adopt a formal binding policy at the meeting. Instead, members instructed staff to present the proposal and the feedback from this meeting to the city council work session with multiple implementation options and to confirm that any redirection would be contingent on annual budget evaluations. Adams told the board staff would include the estimate of potential transfers and recommended guardrails so the council could decide each year whether and how much of any expiring incentive should be directed to the Catalyst Fund.

Key points from the discussion - Estimated potential transfer: $8.9 million over a 10‑year term (estimate dependent on actual agreement expirations and the general fund's condition). - Options requested by board members: fixed percent allocations (examples discussed: 25%, 50%, 100%), or an annual evaluation process tied to the budget. - Board preference: support in principle for building a dedicated cash resource, but members requested (a) a plan that ties a target fund balance to strategic priorities and likely incentive use cases, and (b) annual council review rather than an automatic rollover.

Staff presented mechanics and constraints: Adams and staff noted that many incentive agreements require annual compliance reporting from companies and that the actual funds available for reallocation will depend on compliance, future incentive applications, and overall fiscal conditions. The board also asked staff to model scenarios showing how a target Catalyst Fund balance would support specific types of incentives (for example, headquarters relocation grants vs. job‑creation grants).

Outcome: referral to council work session. Staff will forward the proposal and the range of options and data points requested by the board to the city council work session for further consideration.

Ending: Board members asked staff to bring back fiscal scenarios and comparisons to peer cities so councilors can weigh the tradeoffs in the May council work session.